Market Snapshot
Asia: Japan -0.8% to 20020. Hong Kong +0.8% to 28061. China -0.5% to 4394. India -1.1% to 27438.
Europe: London +0.3%. Paris +0.3%. Frankfurt +0.4%.
Futures: Dow +0.1%. S&P +0.1%. Nasdaq +0.6%. Crude -0.5% to $57.48. Gold -0.3% to $1190.50.
Ten-year Treasury Yield -2 bps to 1.95%
Economic News
8:30 Durable Goods
Key earnings before the open
AAL, AAN, AJG, AOS, AVX, AZN, B, BIIB, COG, DTE, EHTH, FLIR, FNFG, IMGN, IMS, INFY, IPG, LEA, LYB, OFG, PB, SHOO, SPG, STT, TYC, VTR, XRX
Markets
The Nasdaq Composite was poised to bust out another record this morning, with technology stock futures pointing higher as Amazon, Google and Microsoft rise in premarket trade. Gains were less pronounced for the Dow and S&P500 averages however , with futures up 23 points to 18,003 and S&P 500 index futures up 4 points to 2,110.90.
Asian shares took a breather today following a solid week, unmoved by the record session for tech stocks on Wall Street and Nasdaq’s milestone. Barclays economists point to downside risks of Chinese growth and inflation expecting the slowdown in growth to stretch into the June quarter before a pick-up in momentum in the September and December quarters, which assumes stepped-up policy easing measures.
Just a day after clearing a Senate committee, the new Trade Promotion Authority bill has been approved by the House Ways and Means Committee, giving Congress the ability to vote yes or no on trade agreements, but without the ability to make amendments over the next five years. The bill would ease passage of the Trans-Pacific Partnership, which the Obama administration is currently negotiating with Japan and 10 other nations.
Greece appeared to offer concessions on some key reforms on Friday, ahead of the Eurogroup meeting in Riga which will discuss the progress of the country’s reform pledges. Yesterday, Germany’s Angela Merkel said everything must be done to prevent Greece from running out of money.
Tacking a fresh two-week high against a soft dollar, the euro is heading north following weakening fears of a Grexit and Germany’s business survey. Germany’s business climate index rose to 108.6 in April from 107.9 in March – its highest level since June 2014.
Stocks
Microsoft (MSFT) gains as strong growth in hardware and cloud computing during the quarter canceled out a stronger U.S. dollar’s drag and a decline in the company’s core Windows business. Sales in commercial cloud computing, which includes Office 365 and Azure services, soared 106% year-over-year. Still, net income fell nearly 12% to $5B, due to an increase in R&D spending and lingering costs from prior widespread job cuts.
Hurt by slowing growth and the rising U.S. dollar, Google (GOOG, GOOGL) reported weaker-than-expected first-quarter revenue and profit, but better expense control boosted first-quarter margins and lifted the company’s shares. Cost per click, however, declined 7% from a year earlier. If it weren’t for the dollar’s rising value, Google said revenue would have grown 17%.
UBS Wealth Management, the world’s largest wealth manager, has trimmed its positions in U.S. and U.K. stocks, betting that eurozone shares offer the best value and growth prospects due to a combination of QE, accelerating economic growth, and strong corporate earnings. The firm cut its tactical allocation to U.S. stocks to the lowest in three years at “neutral” from “overweight” while initiating an “underweight” on U.K. stocks; Eurozone shares remain at “overweight”.
On a similar note, a new Bank of America Merrill Lynch survey finds that U.S. investors pulled $79B out of equities YTD – including net outflows in 9 of the past 10 weeks – despite stock prices continuing to break new record highs. “Correction risks will grow in the absence of fresh inflows in coming weeks,” the firm says.
Deutsche Bank’s (DB) supervisory board gathered today to review a sweeping restructuring plan to cut back investment banking operations and scrap the Postbank chain to restore profitability. Another proposal calls for Deutsche to exit retail banking entirely, selling both Postbank and its own-branded retail chain to become a pure investment and commercial bank. The decision, which may be announced as early as Friday evening, follows yesterday’s $2.5B fine for the bank’s alleged benchmark interest rate rigging.
Calming worries about cooling growth, Starbucks (SBUX) met quarterly earnings and revenue estimates in FQ2, while reporting a key restaurant metric that surpassed analyst estimates. Global comparable store sales increased 7% during the quarter vs. 5.1% expected and 4.9% a year ago. Starbucks also said it would expand U.S. mobile order and pay service after a successful test launch. SBUX +4.6% premarket.
Comcast plans to drop its hotly-contested efforts to merge with Time Warner Cable (TWC), saying it could make the announcement as soon as today. The news comes a day after reports FCC staff recommended a hearing on the deal and a week after another report claimed DOJ antitrust lawyers are leaning against it.
Samsung (SSNLF) teased the market with hints of a new design for its Gear smartwatch on Friday, the same day its rival’s long-awaited wearable, the Apple (AAPL) Watch, goes on sale. Samsung’s official blog post showed images eschewing the Gear’s familiar square shape for a fully rounded face, alongside apps from CNN (TWX), Yelp (YELP), and Baidu (BIDU). The company said it would also release a software development kit for third-party developers prior to the launch.
Despite rapidly rising sales, Amazon (AMZN) reported a loss again this quarter as it continued to spend heavily on a variety of projects, including drone delivery, streaming-video deals and warehouse construction. Operating margin for the quarter was 1.1% of world-wide sales, compared with 0.7% a year earlier. However, the big disclosure Thursday was a first-time look at the financial performance for its Web services sector, Amazon Web Services. The unit, which Jeff Bezos now calls a “$5B business,” brought in $1.56B in sales in the first quarter, up 49% from a year earlier.